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6 Strategies for Paying Back Private and Federal Student Loans

Published on Author Purefy Staff

How to Pay Off Student Loans Faster

Student loan debt can be a real drag on your finances. In a recent study, 47% of those surveyed reported that they’d put off starting their own business because of their student loan debt. Predictably, 62% of respondents said student debt imposed on their personal budget. With the national student loan debt reaching $1.4 trillion, it’s safe to say that not many of us are as alone as it can sometimes seem. What makes debt easier to handle? While there’s no catch-all, here are some points to consider when paying down debt.


Interest. It’s what makes the saddle of student debt squeeze tight around your belly. The first thing you should do when repaying debt is consider whether it would suit your finances to take care of the highest-interest debts first. This can feel like volunteering yourself for an even tighter saddle but paying off your highest-interest loans – while maintaining your payment plans on whatever other debt you may have – can save you thousands of dollars in the long-run.

Refinancing your debt, especially your student loans (which tend to have higher interest rates) could put you on the fast-track to financial freedom. The whole point of refinancing is to get a lower rate, you can find your new rate here by answering 5 simple questions.


Debt forgiveness on federal loans is offered through many nonprofit organizations. In the Peace Corps, one can apply for deferment of Direct and Perkins loans, and partial cancellation of Perkins Loans. Physicians and nurses working in remote or economically depressed areas can erase part of their federal loans through the National Health Service Corps or Nurse Corps Loan Repayment Program. If you teach in a low-income area, as much as $17,500 of your Federal Direct Loans might be forgiven. Visit the U.S. Department of Education to learn more about this by clicking this link.


With private loans (which generally have higher interest rates than federal loans), it can be useful to refinance them into a private loan. You’ll end up with one monthly payment (less work for you!) and, if your credit has improved since having taken out the loans, you can get a lower interest rate.

Securing a lower interest rate can save you thousands over the life of the loan, and it can also ensure that you spend less of your life dealing with nagging debt. Remember, once you refinance federal loans into a private loan, you cannot switch back. Just make sure to review your federal loans first.


When you have more than one federal loan, consolidating through the federal program can be useful, but some say it’s not worth it. The reason? All of your interest rates will be averaged and rounded up slightly. This means you’ll pay slightly more per month. That said, some repayment plans require that you consolidate all your federal loans to qualify. (If you’re curious about details, see Federal Student Aid site’s page on consolidation repayment.) Remember, when you consolidate some federal loans, even though the federal program, you cannot qualify for some of the payment options.


If you have federal loans and have trouble making monthly payments, there are several repayment plans that are based on your income through the federal program.

The most popular income-driven plans are:

Pay as You Earn (PAYE)

The toughest to qualify for, but it offers the lowest monthly payments.

Revised Pay as You Earn (REPAYE)

Easier to qualify for, so the payments are generally higher than those under PAYE.

Income-Based Repayment (IBR)

The easiest to get, but with generally the highest payments of the three (though still lower than Standard Repayment). If you don’t have trouble making your monthly payments, look into refinancing to lower your rate, get on a better term and to get out of debt faster.


It may sound obvious but the best way to get out debt is to make payments – religiously. Whether you decide to refinance or not, you should be making the minimum payment on each open account every month! This helps your credit and will ensure that you’re not incurring excess interest.